CORPORATE
DRAGOLJUB CIBULIC, SENIOR PARTNER AT BDK ADVOKATI
How Will The DFC Support Infrastructure Projects In Serbia? Over a month has passed since DFC's representatives visited Belgrade, and now might be a good time to highlight a couple of points related to the announced arrival of the DFC in the region
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and how many additional major infrastructerms of the potential to ease tensions t the outset, it is worth recalling ture projects the treasury can sustain. PPP between Serbs and Albanians and achieve that the Development Finance and concession structures are also more long-term stability. Corporation (DFC) is already desirable from the perspective of competiThe DFC approach to developing infrapresent in the region. This newly tiveness and transparency of the approval structure differs from the approach of other created U.S. development bank is the process. Their downside, however, is in the development banks, in that DFC does not successor to OPIC, which was involved fact that they are more time consuming lend directly to governments but instead in a number of projects in Serbia and the and, at the end of the day, may still require a supports private investments in such proregion, primarily in issuing guarantees for certain level of governmental support if the jects through public-private partnerships sector-specific lending programs carried development of the relevant infrastructure and concession structures. In order to utilize out by local banks. is not bankable on its own. the DFC’s funds in the development of vital What’s new is that the DFC has an inSerbia is currently showered with offers infrastructure projects, Serbia will have creased lending capacity of $60 billion of significant development funds from the to adjust its preferred structure for the (twice that of OPIC) and an expanded remit world’s three superstates – the allowing it to invest in equity and U.S., EU and China. Some of these project pre-development studies. In order to utilize the DFC’s funds investment offers overlap. The However, the most important for the development of vital infrastructure Serbian Government has so far change is its mission, which is shown readiness to go beyond to advance U.S. foreign policy projects, Serbia will have to adjust its the usual and even split a proand offer “a robust alternative to preferred structure for the development ject between interested parties state-directed investment that of infrastructure, which has been to (with the Belgrade Metro, for often leaves countries saddled take out a sovereign loan from example). However, it will not be with debt”. Obviously, the DFC’s a development bank to finance easy to maintain that approach, mission is to counter the Belt works carried out by a contractor given that different actors have and Road initiative and provide conflicting interests. The Serbian an alternative source for develGovernment should choose the appropriate development of infrastructure, which has oping countries to finance infrastructure structure for specific investments carebeen to take out a sovereign loan from a development. fully, and the optimal source of financing development bank to finance works carried It is therefore not surprising that the for them. Most importantly, the selection out by a contractor. A different approach flagship projects featured during meetings of projects should be based on a national could be beneficial for the national budget, between the DFC and Serbian officials investment strategy that’s coherent and which has taken a major beating from the are two transport infrastructure projects publicly scrutinized. ongoing pandemic. It is questionable whether that are of major political significance in
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ROAD TO NEW PARTNERSHIP
